The Ministry of Corporate Affairs has notified exceptions for Corporate Debtor under Section 14(1) of Insolvency and Bankruptcy Code, 2016 (IBC) via issuing Notification.
Reetu | Jun 17, 2023 |
MCA notifies Exceptions for Corporate Debtor under sec 14(1) of IBC
The Ministry of Corporate Affairs(MCA) has notified exceptions for Corporate Debtor under Section 14(1) of Insolvency and Bankruptcy Code, 2016 (IBC) via issuing Notification.
A corporate debtor is a corporate person who owes a debt to any person under the Insolvency and Bankruptcy Code 2016 (IBC). Section 3(7) of the IBC defines corporate persons as companies defined under the Companies Act, limited liability partnerships (LLPs) defined under the Limited Liability Partnership Act, and any other person incorporated with limited liability, but does not include financial services providers, such as banks or NBFCs.
According to Sections 7 and 9 of the IBC, it is not mandatory to give the corporate debtor the opportunity to be heard until the IBC application is admitted by the Adjudicating Authority, and according to Section 14, once an IBC application is admitted, the corporate debtor’s key management personnel will report to the IRP proposed by the applicant. As a result, even minor defaults have a significant probability of triggering the corporate debtor’s insolvency procedure.
The Notification Stated, “In exercise of the powers conferred by clause (a) of sub-section (3) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies that the provisions of sub-section (1) of section 14 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), shall not apply where the corporate debtor has entered into any of the following transactions, arrangements or agreements.”
(i) the Production Sharing Contracts, Revenue Sharing Contracts, Exploration Licenses and Mining Leases made under the Oilfields (Regulation and Development) Act, 1948 (53 of 1948) and rules made thereunder; and
(ii) any transactions, arrangements or agreements, including Joint Operating Agreement, connected or ancillary to the transactions, arrangements or agreements referred to in clause (i).
For Official Notification Download PDF Given Below:
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